These clean energy stocks are breaking out on Biden optimism, Bank of America chart analyst says

Published Tue, Oct 20 202010:40 AM EDT

(This story is for CNBC PRO subscribers only.) A number of clean energy stocks are breaking out as Biden rises in the polls, and Bank of America said there's more upside ahead for some of the key players in the renewables space. The former Vice President has outlined a $2 trillion sustainable infrastructure plan that would make the U.S. power sector carbon free by 2035, and the country carbon neutral by 2050. "With increasing investor expectations of not just a potential Biden win but further upside for renewables tied to a Dem sweep at the Senate, we note broader expectations for the solar industry to benefit broadly," Bank of America technical research strategist Stephen Suttmeier said in a recent note to clients. "On a relative price basis we have seen a very bullish rotation for clean energy relative to utilities on an upside breakout from a 9-year big base vs utilities," he added. Given these stocks' record run, Suttmeier said there's "clear election upside," but did caution around increasingly higher investor expectations. With that in mind, he believes a company-specific approach should be taken, noting that residential solar plays could be a big winner given that the federal solar tax credit could be extended even if the Senate doesn't flip. Here are some of his top picks: Sunnova Suttmeier said that Sunnova has a bullish setup, pointing to the stock's breakout from a bottom pattern in mid-July followed by a bullish consolidation in late September. From a fundamental perspective, Bank of America believes that Sunnova offers "among [the] most significant upside" within the broader cleantech sector since it remains "justifiable on a DCF [discounted cash flow] basis." The firm has a $36 target on the stock. Shares of Sunnova have gained 168% this year through Monday's close. Sunrun Shares of Sunrun are up 351% this year through Monday's close, although the stock has encountered some weakness recently and shares are down 19% this month. But Suttmeier noted that Sunrun has now retraced more than half of its 90% rally between early September and early October, meaning it could have upside potential into the $96 to $102 range. The stock opened at $62.42 on Tuesday. "We continue to see RUN as an attractive pick within cleantech, supported by tailwinds around continued declines in resi solar cost of capital as well as robust recovery in growth and home improvement trends," Bank of America said. "We perceive RUN as holding among greatest likelihood of sustaining the valuation gains across the sector, with greatest exposure to upside in a Biden win," the firm added. Clearway Energy When it comes to renewables company Clearway Energy , Suttmeier said that while the stock's momentum has paused, it "remains within a solid uptrend with positive on-balance-volume and upside potential." Suttmeier sees the stock breaking out to a new all-time high of $33.65. The stock opened at $29.53 on Tuesday, and shares have gained 46% this year through Monday's close. Bank of America has a buy rating on the stock, pointing to the company's positive growth prospects, as well as its strong management team. NextEra Energy After looking at the charts, Suttmeier believes NextEra Energy can hit $350 to $360. The stock closed at $299.55 on Monday, bringing its year-to-date gain to 23%. Bank of America said the stock price isn't yet reflecting the company's positive EPS revisions and future value creation from its energy storage business. "We expect shares to continue to re-rate higher given continued execution and tailwinds from federal elections," the firm said. - CNBC's Michael Bloom contributed reporting.

Photovoltaic solar panels at a power plant in La Colle des Mees, Alpes de Haute Provence, southeastern France, on April 17, 2019.

Gerard Julien | AFP | Getty Images

(This story is for CNBC PRO subscribers only.)

A number of clean energy stocks are breaking out as Biden rises in the polls, and Bank of America said there's more upside ahead for some of the key players in the renewables space.

The former Vice President has outlined a $2 trillion sustainable infrastructure plan that would make the U.S. power sector carbon free by 2035, and the country carbon neutral by 2050.

"With increasing investor expectations of not just a potential Biden win but further upside for renewables tied to a Dem sweep at the Senate, we note broader expectations for the solar industry to benefit broadly," Bank of America technical research strategist Stephen Suttmeier said in a recent note to clients. "On a relative price basis we have seen a very bullish rotation for clean energy relative to utilities on an upside breakout from a 9-year big base vs utilities," he added.

Given these stocks' record run, Suttmeier said there's "clear election upside," but did caution around increasingly higher investor expectations. With that in mind, he believes a company-specific approach should be taken, noting that residential solar plays could be a big winner given that the federal solar tax credit could be extended even if the Senate doesn't flip.

Here are some of his top picks: